Fourth Quarter 2018 Highlights
- Sales of $715 million grew 4% as
reported and 5% in constant currency
- Growth across all end markets, with
strong pharmaceutical and TA results
- Strong growth in China and improved
U.S. performance; slight decline in Europe
- GAAP EPS of $2.46; non-GAAP EPS
increased 14% to $2.87
Waters Corporation (NYSE: WAT) today announced fourth quarter
2018 sales of $715 million, a 4% increase as reported, compared to
sales of $687 million for the fourth quarter of 2017. Foreign
currency translation negatively impacted sales growth by
approximately 1% for the quarter.
On a GAAP basis, diluted earnings per share (EPS) for the fourth
quarter of 2018 increased to $2.46, compared to a diluted loss per
share of $4.44 for the fourth quarter of 2017, which included a
$550 million income tax charge. On a non-GAAP basis, EPS increased
14% to $2.87, compared to $2.51 for the fourth quarter of 2017. A
description and reconciliation of GAAP to non-GAAP results appear
in the table below and can be found on the Company’s website at
http://www.waters.com under the caption “Investors.”
On a GAAP basis, net cash provided by operating activities for
the fourth quarter of 2018 was $182 million versus $192 million for
the fourth quarter of 2017. On a non-GAAP basis, adjusted free cash
flow for the fourth quarter of 2018 was $160 million versus $162
million for the fourth quarter of 2017.
For fiscal year 2018, the Company’s sales were $2,420 million,
up 5% as reported, compared to sales of $2,309 million for fiscal
year 2017. Foreign currency translation increased sales growth by
approximately 1% during fiscal year 2018. On a GAAP basis, EPS for
fiscal year 2018 was $7.65, compared to $0.25 for fiscal year 2017.
On a non-GAAP basis, and including adjustments in the
reconciliation below, EPS increased 11% to $8.29, compared to $7.49
for fiscal year 2017.
On a GAAP basis, net cash provided by operating activities for
fiscal year 2018 was $604 million versus $698 million for fiscal
year 2017. On a non-GAAP basis, adjusted free cash flow for fiscal
year 2018 was $600 million versus $612 million for fiscal year
2017.
Chris O’Connell, Chairman and Chief Executive Officer of Waters
Corporation, commented, “We were pleased to end 2018 on a high
note, with improving performance in our key market categories,
products, and geographies. This fourth quarter improvement was
highlighted by strength in our pharmaceutical category, TA product
line, and China. We are looking forward to building on this
momentum in 2019 and expect to benefit from our new product cycle,
headlined by yesterday’s BioAccord system launch.”
Unless otherwise noted, sales growth and decline percentages are
presented on an as-reported basis and are the same as the sales
growth and decline percentages presented on a constant-currency
basis as compared with the same period in the prior year, each of
which is detailed in the reconciliation of sales growth rates to
constant-currency growth rates below.
During the fourth quarter of 2018, sales into the pharmaceutical
market grew 6% as reported and 7% in constant currency, sales into
the industrial market grew 1% as reported and 2% in constant
currency, and sales into the governmental and academic markets grew
2% as reported and 3% in constant currency. During fiscal year
2018, sales into the pharmaceutical market grew 5% as reported and
4% in constant currency, sales into the industrial market grew 2%
as reported and 1% in constant currency, and sales into the
governmental and academic markets grew 8% as reported and 7% in
constant currency.
During the fourth quarter, recurring revenues, which represent
the combination of service and precision chemistries revenues, grew
5% as reported and 6% in constant currency, while instrument system
sales grew 3% as reported and 4% in constant currency. For fiscal
year 2018, recurring revenues grew 8% as reported and 6% in
constant currency, while instrument system sales grew 2% as
reported and 1% in constant currency.
Geographically, sales in Asia during the quarter grew 8% as
reported and 9% in constant currency, sales in the Americas grew 5%
as reported and 6% in constant currency (with U.S. sales growing
5%), and sales in Europe declined 3% as reported and 1% in constant
currency. For fiscal year 2018, sales in Asia grew 7% as reported
and 6% in constant currency, sales in the Americas grew 3% (with
U.S. sales growing 2%), and sales in Europe grew 4% as reported and
1% in constant currency.
First Quarter and Fiscal Year 2019 Financial Outlook
The Company expects full-year 2019 constant currency sales
growth in the range of 4% to 6%. As of today, currency translation
is expected to decrease full-year sales growth by 1% to 2%. The
Company also expects full-year 2019 non-GAAP earnings per fully
diluted share in the range of $9.20 to $9.45. Please refer to the
table below for a reconciliation of the projected GAAP to non-GAAP
financial outlook for the full year.
The Company expects first quarter 2019 constant currency sales
growth in the range of 4% to 6%. As of today, currency translation
is expected to decrease first quarter sales growth by approximately
2% to 3%. The Company also expects first quarter 2019 non-GAAP
earnings per fully diluted share in the range of $1.65 to $1.75.
Please refer to the table below for a reconciliation of the
projected GAAP to non-GAAP financial outlook for the first
quarter.
New $4 Billion Share Repurchase Authorization
Waters Corporation also announced today that its Board of
Directors authorized a new share repurchase program. This new
program authorizes the purchase of up to $4 billion of the
Company’s common stock over a two-year period and replaces the
pre-existing program.
Conference Call
Waters Corporation will webcast its fourth quarter 2018
financial results conference call today, January 23, 2019 at 8:00
a.m. Eastern Time. To listen to the call, please visit
www.waters.com, choose “Investors,” and click on the “Live
Webcast.” A replay will be available through January 30, 2019 at
midnight Eastern Time on the same website by webcast and also by
phone at 402-220-0191.
About Waters Corporation
Waters Corporation (NYSE: WAT), the world's leading specialty
measurement company, has pioneered chromatography, mass
spectrometry and thermal analysis innovations serving the life,
materials and food sciences for more than 60 years. With
approximately 7,000 employees worldwide, Waters operates directly
in 31 countries, including 15 manufacturing facilities, and with
products available in more than 100 countries. For more
information, visit www.waters.com.
Non-GAAP Financial Measures
This press release contains financial measures, such as constant
currency growth rate, adjusted operating income, adjusted net
income, adjusted earnings per diluted share and free cash flow,
among others, which are considered “non-GAAP” financial measures
under applicable U.S. Securities and Exchange Commission rules and
regulations. These non-GAAP financial measures should be considered
supplemental to, and not a substitute for, financial information
prepared in accordance with generally accepted accounting
principles (GAAP). The Company’s definition of these non-GAAP
measures may differ from similarly titled measures used by others.
The non-GAAP financial measures used in this press release adjust
for specified items that can be highly variable or difficult to
predict. The Company generally uses these non-GAAP financial
measures to facilitate management’s financial and operational
decision-making, including evaluation of Waters Corporation’s
historical operating results, comparison to competitors’ operating
results and determination of management incentive compensation.
These non-GAAP financial measures reflect an additional way of
viewing aspects of the Company’s operations that, when viewed with
GAAP results and the reconciliations to corresponding GAAP
financial measures, may provide a more complete understanding of
factors and trends affecting Waters Corporation’s business. Because
non-GAAP financial measures exclude the effect of items that will
increase or decrease the Company’s reported results of operations,
management strongly encourages investors to review the Company’s
consolidated financial statements and publicly filed reports in
their entirety. Reconciliations of the non-GAAP financial measures
to the most directly comparable GAAP financial measures are
included in the tables accompanying this release.
Cautionary Statement
This release may contain “forward-looking” statements regarding
future results and events. For this purpose, any statements that
are not statements of historical fact may be deemed forward-looking
statements. Without limiting the foregoing, the words, “feels”,
“believes”, “anticipates”, “plans”, “expects”, “intends”,
“suggests”, “appears”, “estimates”, “projects”, and similar
expressions, whether in the negative or affirmative, are intended
to identify forward-looking statements. The Company’s actual future
results may differ significantly from the results discussed in the
forward-looking statements within this release for a variety of
reasons, including and without limitation, foreign exchange rate
fluctuations potentially affecting translation of the Company’s
future non-U.S. operating results; the impact on demand for the
Company’s products among the Company’s various market sectors from
economic, sovereign and political uncertainties, particularly
regarding the effect of new or proposed tariff or trade
regulations; the effect on the Company’s financial results from the
United Kingdom voting to exit the European Union; fluctuations in
expenditures by the Company’s customers, in particular large
pharmaceutical companies; introduction of competing products by
other companies and loss of market share; pressures on prices from
competitors and/or customers; regulatory, economic and competitive
obstacles to new product introductions; other changes in demand for
the Company’s products from the effect of mergers and acquisitions
by the Company’s customers; increased regulatory burdens as the
Company’s business evolves, especially with respect to the U.S.
Food and Drug Administration and U.S. Environmental Protection
Agency, among others; impact of the newly enacted tax reform
legislation in the U.S.; shifts in taxable income in jurisdictions
with different effective tax rates; the outcome of tax examinations
or changes in respective country legislation affecting the
Company’s effective tax rate; the effect of the adoption of new
accounting standards; the ability to access capital, maintain
liquidity and service the Company’s debt in volatile market
conditions, particularly in the U.S., as a large portion of the
Company’s cash is held and operating cash flows are generated
outside the U.S.; environmental and logistical obstacles affecting
the distribution of products and risks associated with lawsuits and
other legal actions, particularly involving claims for infringement
of patents and other intellectual property rights. Such factors and
others are discussed more fully in the sections entitled
“Forward-Looking Statements” and “Risk Factors” of the Company’s
annual report on Form 10-K for the year ended December 31, 2017 as
filed with the Securities and Exchange Commission, which
“Forward-Looking Statements” and “Risk Factors” discussions are
incorporated by reference in this release. The forward-looking
statements included in this release represent the Company’s
estimates or views as of the date of this release and should not be
relied upon as representing the Company’s estimates or views as of
any date subsequent to the date of this release.
Waters Corporation and Subsidiaries Consolidated
Statements of Operations (In thousands, except per share
data) (Unaudited)
Three Months Ended Twelve Months Ended December
31, 2018 December 31, 2017 December 31, 2018
December 31, 2017 Net sales $ 715,019 $ 687,275 $
2,419,929 $ 2,309,078 Costs and operating expenses: Cost of
sales 286,869 270,453 992,564 947,067 Selling and administrative
expenses 142,853 148,391 536,902 544,363 Research and development
expenses 38,106 35,122 143,403 132,593 Purchased intangibles
amortization 2,337 1,639 7,712 6,743 Litigation provision
(settlement) 322 1,096 (426 ) 11,114 Acquired in-process research
and development - - - 5,000 Operating income 244,532 230,574
739,774 662,198 Other expense (1)(2) (45,501 ) (404 )
(47,794 ) (340 ) Interest expense, net (1,225 ) (4,432 ) (9,834 )
(20,761 ) Income from operations before income taxes 197,806
225,738 682,146 641,097 Provision for income taxes(3) 12,654
578,910 88,352 620,786 Net income (loss) $ 185,152 $
(353,172 ) $ 593,794 $ 20,311 Net income (loss) per
basic common share $ 2.48 $ (4.44 ) $ 7.71 $ 0.25
Weighted-average number of basic common shares 74,802 79,454 76,992
79,793 Net income (loss) per diluted common share $
2.46 $ (4.44 ) $ 7.65 $ 0.25 Weighted-average number of
diluted common shares and equivalents 75,345 79,454 77,618 80,604
(1) The Company adopted new accounting guidance which requires
that an employer disaggregate the service cost component from other
components of net benefit cost. As a result of the adoption of this
standard, the components of net periodic benefit cost other than
the service cost component are included in other income in the
consolidated statements of operations and all previous periods have
been adjusted accordingly.
(2) In May 2018, the Company's board of directors approved the
termination of its frozen U.S. defined benefit pension plans. In
December 2018, the Company settled a pension plan obligation by
making lump-sum cash payments and purchasing annuity contracts for
participants to permanently extinguish the pension plan's
obligations. As a result, the Company recorded a $46 million
charge, which consisted of a $6 million cash contribution to the
plan and a $40 million non-cash charge related to the reversal of
unrecognized actuarial losses recorded in accumulated other
comprehensive income in the stockholders' equity.
(3) The provision for income taxes for the three and twelve
months ended December 31, 2017 included a $550 million estimate for
the impact of the enactment of the Tax Cuts and Jobs Act. The
provision for income taxes for the three and twelve months ended
December 31, 2018 included a $5 million benefit and a $1 million
expense, respectively, related to U.S. tax reform. The provisions
include: (1) an adjustment to our 2017 year end accrual for the
toll charge resulting from federal proposed regulations and other
state guidance and (2) the tax that results from the change in
foreign currency exchange rates on the earnings taxed on December
31, 2017 under the Tax Cuts and Jobs Act as compared with the
foreign currency exchange rates on the date of distribution of
assets into the U.S.
Waters Corporation and Subsidiaries Reconciliation of
GAAP to Adjusted Non-GAAP Net Sales by Operating Segment,
Products & Services, Geography and Markets Three Months
Ended December 31, 2018 and December 31, 2017 (In
thousands) Current Period Constant
Three Months Ended Percent Currency
Currency December 31, 2018 December 31, 2017
Change Impact Growth Rate (a)
NET SALES - OPERATING SEGMENT Waters $ 625,099 $ 602,453 4 %
$ (5,087 ) 5 % TA 89,920 84,822 6 % (807 ) 7 %
Total $ 715,019 $
687,275 4 % $ (5,894 )
5 % NET SALES - PRODUCTS & SERVICES
Instruments $ 392,016 $ 379,114 3 % $ (1,457 ) 4 %
Service 216,534 207,610 4 % (2,641 ) 6 % Chemistry 106,469
100,551 6 % (1,796 ) 8 % Total Recurring 323,003
308,161 5 % (4,437 ) 6 %
Total $ 715,019 $ 687,275
4 % $ (5,894 ) 5 %
NET SALES - GEOGRAPHY Asia $ 262,910 $ 242,469
8 % $ (2,016 ) 9 % Americas 248,538 235,740 5 % (469 ) 6 % Europe
203,571 209,066 (3 %) (3,409 ) (1 %)
Total $ 715,019 $
687,275 4 % $ (5,894 )
5 % NET SALES - MARKETS
Pharmaceutical $ 396,883 $ 373,245 6 % $ (3,621 ) 7 % Industrial
219,165 216,905 1 % (1,013 ) 2 % Governmental & Academic 98,971
97,125 2 % (1,260 ) 3 %
Total $ 715,019 $ 687,275
4 % $ (5,894 ) 5 %
(a) The Company believes that referring to comparable constant
currency growth rates is a useful way to evaluate the underlying
performance of Waters Corporation's net sales. Constant currency
growth rate, a non-GAAP financial measure, measures the change in
net sales between current and prior year periods, ignoring the
impact of foreign currency exchange rates during the current
period. See description of non-GAAP financial measures contained in
this release.
Waters Corporation and Subsidiaries Reconciliation
of GAAP to Adjusted Non-GAAP Net Sales by Operating Segment,
Products & Services, Geography and Markets Twelve Months
Ended December 31, 2018 and December 31, 2017 (In
thousands) Current Period Constant
Twelve Months Ended Percent Currency
Currency December 31, 2018 December 31, 2017
Change Impact Growth Rate (a)
NET SALES - OPERATING SEGMENT Waters $ 2,139,345 $ 2,047,563
4 % $ 23,680 3 % TA 280,584 261,515 7 % 1,831 7 %
Total $ 2,419,929
$ 2,309,078 5 % $ 25,511
4 % NET SALES - PRODUCTS & SERVICES
Instruments $ 1,204,706 $ 1,180,192 2 % $ 10,887 1 %
Service 814,936 756,729 8 % 9,631 6 % Chemistry 400,287
372,157 8 % 4,993 6 % Total Recurring 1,215,223
1,128,886 8 % 14,624 6 %
Total $ 2,419,929 $ 2,309,078
5 % $ 25,511 4 %
NET SALES - GEOGRAPHY Asia $ 922,291 $ 862,617 7 % $
5,775 6 % Americas 835,177 809,989 3 % (49 ) 3 % Europe 662,461
636,472 4 % 19,785 1 %
Total $ 2,419,929 $ 2,309,078
5 % $ 25,511 4 %
NET SALES - MARKETS Pharmaceutical $ 1,365,731 $
1,294,668 5 % $ 15,340 4 % Industrial 737,144 721,088 2 % 8,028 1 %
Governmental & Academic 317,054 293,322 8 % 2,143 7 %
Total $
2,419,929 $ 2,309,078 5 %
$ 25,511 4 %
(a) The Company believes that referring to comparable constant
currency growth rates is a useful way to evaluate the underlying
performance of Waters Corporation's net sales. Constant currency
growth rate, a non-GAAP financial measure, measures the change in
net sales between current and prior year periods, ignoring the
impact of foreign currency exchange rates during the current
period. See description of non-GAAP financial measures contained in
this release.
Waters Corporation and
Subsidiaries Reconciliation of GAAP to Adjusted Non-GAAP
Financials Three and Twelve Months Ended December 31, 2018
and December 31, 2017 (In thousands, except per share
data) Income from Operations
Diluted Selling & Research &
Operating Other before Provision for
Net Earnings Administrative Development
Operating Income (Expense) Income
Income Income (Loss)
Expenses(a) Expenses(a) Income
Percentage Income Taxes Taxes
(Loss) per Share Quarter Ended December 31,
2018 GAAP $ 145,512 $ 38,106
$ 244,532 34.2 % $
(45,501 ) $ 197,806 $
12,654 $ 185,152 $ 2.46
Adjustments: Purchased intangibles amortization (b) (2,337 ) -
2,337 0.3 % - 2,337 674 1,663 0.02 Restructuring costs and certain
other items (c) 194 - (194 ) - - (194 ) 1 (195 ) - Pension
termination (d) - - - - 45,891 45,891 15,879 30,012 0.40 Litigation
provisions (e) (322 ) - 322 - - 322 77 245 - Tax reform (f) - - - -
- - 1,073 (1,073 ) (0.01 ) Certain income tax items (g) -
- - - -
- (726 ) 726 0.01
Adjusted Non-GAAP $ 143,047
$ 38,106 $ 246,997
34.5 % $ 390 $
246,162 $ 29,632 $
216,530 $ 2.87 Quarter
Ended December 31, 2017 GAAP $ 151,126
$ 35,122 $ 230,574 33.5 %
$ (404 ) $ 225,738 $
578,910 $ (353,172 ) $
(4.44 ) Adjustments: Purchased intangibles
amortization (b) (1,639 ) - 1,639 0.2 % - 1,639 424 1,215 0.02
Restructuring costs and certain other items (c) (2,452 ) - 2,452
0.4 % - 2,452 791 1,661 0.02 Litigation provisions (e) (1,096 ) -
1,096 0.2 % - 1,096 411 685 0.01 Stock award modification (h) (379
) - 379 0.1 % - 379 142 237 - Tax reform (f) - - - - - - (550,000 )
550,000 6.89 Certain income tax items (g) - -
- - - -
(1,012 ) 1,012 0.01
Adjusted Non-GAAP $ 145,560 $
35,122 $ 236,140
34.4 % $ (404 ) $
231,304 $ 29,666 $
201,638 $ 2.51 Twelve
Months Ended December 31, 2018 GAAP $
544,188 $ 143,403 $ 739,774
30.6 % $ (47,794 ) $
682,146 $ 88,352 $ 593,794
$ 7.65 Adjustments: Purchased intangibles
amortization (b) (7,712 ) - 7,712 0.3 % - 7,712 1,609 6,103 0.08
Restructuring costs and certain other items (c) (2,244 ) - 2,244
0.1 % - 2,244 550 1,694 0.02 Pension termination (d) - - - - 49,138
49,138 16,659 32,479 0.42 Litigation settlement (e) 426 - (426 ) -
- (426 ) (102 ) (324 ) - Stock award modification (h) (1,014 ) -
1,014 - - 1,014 243 771 0.01 Tax reform (f) - - - - - - (5,157 )
5,157 0.07 Certain income tax items (g) - -
- - - -
(4,111 ) 4,111 0.05
Adjusted Non-GAAP $ 533,644 $
143,403 $ 750,318
31.0 % $ 1,344 $
741,828 $ 98,043 $
643,785 $ 8.29 Twelve
Months Ended December 31, 2017 GAAP $
562,220 $ 137,593 $ 662,198
28.7 % $ (340 ) $
641,097 $ 620,786 $ 20,311
$ 0.25 Adjustments: Purchased intangibles
amortization (b) (6,743 ) - 6,743 0.3 % - 6,743 1,782 4,961 0.06
Restructuring costs and certain other items (c) (15,993 ) - 15,993
0.7 % - 15,993 5,516 10,477 0.13 Litigation provisions (e) (11,114
) - 11,114 0.5 % - 11,114 4,168 6,946 0.09 Stock award modification
(h) (4,234 ) - 4,234 0.2 % - 4,234 1,588 2,646 0.03 Acquired
in-process research and development (i) - (5,000 ) 5,000 0.2 % -
5,000 962 4,038 0.05 Tax reform (f) - - - - - - (550,000 ) 550,000
6.82 Certain income tax items (g) - -
- - - -
(4,296 ) 4,296 0.05
Adjusted
Non-GAAP $ 524,136 $ 132,593
$ 705,282 30.5 %
$ (340 ) $ 684,181
$ 80,506 $ 603,675
$ 7.49
(a) Selling & administrative expenses include purchased
intangibles amortization and litigation provisions. Research &
development expenses include acquired in-process research and
development.
(b) The purchased intangibles amortization, a non-cash expense,
was excluded to be consistent with how management evaluates the
performance of its core business against historical operating
results and the operating results of competitors over periods of
time.
(c) Restructuring costs and certain other items were excluded as
the Company believes that the cost to consolidate operations and
reduce overhead and certain other income or expense items are not
normal and do not represent future ongoing business expenses of a
specific function or geographic location of the Company.
(d) In May 2018, the Company's board of directors approved the
termination of its frozen U.S. defined benefit pension plans. In
December 2018, the Company settled a pension plan obligation by
making lump-sum cash payments and purchasing annuity contracts for
participants to permanently extinguish the pension plan's
obligations. As a result, the Company recorded a $46 million
charge, which consisted of a $6 million cash contribution to the
plan and a $40 million non-cash charge related to the reversal of
unrecognized actuarial losses recorded in accumulated other
comprehensive income in the stockholders' equity. The pension
expense associated with terminating a frozen defined benefit
pension plan was excluded as the Company believes these expenses
are not indicative of normal operating costs.
(e) Litigation provisions and settlement gains were excluded as
these costs are isolated, unpredictable and not expected to recur
regularly.
(f) The provision for income taxes for the three and twelve
months ended December 31, 2017 included a $550 million estimate for
the impact of the enactment of the Tax Cuts and Jobs Act. The
provision for income taxes for the three and twelve months ended
December 31, 2018 included a $5 million benefit and a $1 million
expense, respectively, related to U.S. tax reform. The provisions
include: (1) an adjustment to our 2017 year end accrual for the
toll charge resulting from federal proposed regulations and other
state guidance and (2) the tax that results from the change in
foreign currency exchange rates on the earnings taxed on December
31, 2017 under the Tax Cuts and Jobs Act as compared with the
foreign currency exchange rates on the date of distribution of
assets into the U.S. The Company believes this expense is not
indicative of the Company's normal or future income tax
expense.
(g) Certain income tax items were excluded as these non-cash
expenses and benefits represent updates in management's assessment
of ongoing examinations or other tax items that are not indicative
of the Company’s normal or future income tax expense.
(h) The non-cash expense associated with accelerating the
vesting of certain stock awards was excluded as the Company
believes these expenses are not indicative of normal operating
costs.
(i) Acquired in-process research and development was excluded as
it relates to milestone payments associated with a licensing
arrangement for mass spectrometry that the Company believes is
unusual and not indicative of its normal business operations.
Waters Corporation and Subsidiaries
Preliminary Condensed Unclassified Consolidated Balance
Sheets (In thousands and unaudited)
December 31, 2018 December 31, 2017 Cash, cash
equivalents and investments $ 1,735,224 $ 3,393,701 Accounts
receivable 568,316 533,825 Inventories 291,569 270,294 Property,
plant and equipment, net 343,083 349,278 Intangible assets, net
246,902 228,395 Goodwill 355,614 359,819 Other assets 186,718
189,042 Total assets $ 3,727,426 $ 5,324,354 Notes
payable and debt $ 1,148,350 $ 1,997,774 Other liabilities
1,011,818 1,092,792 Total liabilities 2,160,168 3,090,566
Total equity 1,567,258 2,233,788 Total liabilities and equity $
3,727,426 $ 5,324,354
Waters Corporation and
Subsidiaries Preliminary Condensed Consolidated Statements
of Cash Flows Three and Twelve Months Ended December 31,
2018 and December 31, 2017 (In thousands and unaudited)
Three Months
Ended Twelve Months Ended December 31, 2018
December 31, 2017 December 31, 2018 December 31,
2017 Cash flows from operating activities: Net income
(loss) $ 185,152 $ (353,172 ) $ 593,794 $ 20,311 Adjustments to
reconcile net income (loss) to net cash provided by operating
activities: Stock-based compensation 9,357 9,368 37,541 39,436
Depreciation and amortization 25,597 27,753 108,408 106,002 Effect
of the 2017 Tax Act (a) - 530,383 - 530,383 Change in operating
assets and liabilities, net (38,557 ) (22,148 )
(135,297 ) 1,508 Net cash provided by
operating activities 181,549 192,184 604,446 697,640 Cash
flows from investing activities: Additions to property, plant,
equipment and software capitalization (31,864 ) (30,216 ) (96,079 )
(85,473 ) Asset acquisitions, net of cash acquired - - (31,486 ) -
Investment in unaffiliated company - - (7,615 ) (7,000 ) Payments
for intellectual property licenses - - - (5,000 ) Net change in
investments 457,448 (101,548 )
1,818,482 (438,279 ) Net cash provided by (used in)
investing activities 425,584 (131,764 ) 1,683,302 (535,752 )
Cash flows from financing activities: Net change in debt (171 )
39,850 (850,161 ) 169,976 Payments of debt issuance costs - (2,984
) - (2,984 ) Proceeds from stock plans 10,052 24,968 52,429 97,789
Purchases of treasury shares (498,457 ) (86,802 ) (1,315,106 )
(332,544 ) Other cash flow from financing activities, net
(4,503 ) 593 (6,684 ) 3,894 Net
cash used in financing activities (493,079 ) (24,375 ) (2,119,522 )
(63,869 ) Effect of exchange rate changes on cash and cash
equivalents (7,147 ) 2,467 (14,265 )
38,669 Increase in cash and cash equivalents 106,907
38,512 153,961 136,688 Cash and cash equivalents at
beginning of period 689,373 603,807
642,319 505,631 Cash and cash
equivalents at end of period $ 796,280 $ 642,319 $
796,280 $ 642,319
Reconciliation of GAAP Cash Flows from Operating Activities to
Free Cash Flow (b) Net cash
provided by operating activities - GAAP $ 181,549 $ 192,184 $
604,446 $ 697,640 Adjustments: Additions to property, plant,
equipment and software capitalization (31,864 ) (30,216 ) (96,079 )
(85,473 ) Tax reform payments (783 ) - 53,716 - Litigation
settlement payment - - 15,400 - Major facility renovations 5,059 -
10,505 - One-time pension contributions 6,307 - 11,552 -
Free Cash Flow - Adjusted Non-GAAP $ 160,268
$ 161,968 $ 599,540 $ 612,167
(a) In the fourth quarter of 2017, the Company recorded a $550
million income tax provision for an estimate of the impact of the
enactment of the Tax Cuts and Jobs Act (2017 Tax Act), which was
signed into law on December 22, 2017. The $550 million income tax
provision primarily consists of an estimated U.S. transition tax as
well as estimated income tax provisions for state and withholding
taxes and a charge associated with the remeasurement of the
Company's deferred tax assets and liabilities from 35% to the new
U.S. corporate income tax rate of 21%.
(b) The Company defines free cash flow as net cash flow from
operations accounted for under GAAP less capital expenditures and
software capitalizations plus or minus any unusual and non
recurring items. Free cash flow is not a GAAP measurement and may
not be comparable to free cash flow reported by other
companies.
Waters
Corporation and Subsidiaries Reconciliation of Projected
GAAP to Adjusted Non-GAAP Financial Outlook (In thousands,
except per share data) Three Months Ended
Twelve Months Ended March 30, 2019 December 31,
2019 Range Range Projected Sales
Projected constant currency sales growth rate 4 % - 6 % 4 % - 6 %
Projected currency impact (3 %) - (2 %) (2 %) - (1 %)
Projected sales growth rate as reported
1 % - 4 % 2 % - 5 %
Projected
Earnings Per Diluted Share Range Range
Projected GAAP earnings per diluted share $ 1.62 - $ 1.72 $
9.07 - $ 9.32 Adjustments: Purchased intangibles amortization $
0.02 - $ 0.02 $ 0.09 - $ 0.09 Certain income tax items $ 0.01
- $ 0.01 $ 0.04 - $ 0.04 Projected
adjusted non-GAAP earnings per diluted share $ 1.65 - $ 1.75
$ 9.20 - $ 9.45
Constant currency growth rates are a non-GAAP financial measure
that measures the change in net sales between current and prior
year periods, ignoring the impact of foreign currency exchange
rates during the current period. These amounts are estimated at the
current foreign currency exchange rates and based on the forecasted
geographical sales in local currency, as well as an assessment of
market conditions as of today, and may differ significantly from
actual results.
These forward-looking adjustment estimates do not reflect future
gains and charges that are inherently difficult to predict and
estimate due to their unknown timing, effect and/or
significance.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190123005161/en/
Bryan Brokmeier, CFA, Senior Director, Investor Relations,
508-482-3448
Waters (NYSE:WAT)
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